This paper combines two different studies of performance in
order to more fully understand the effect of paceon
performance. (The variable being studied is pace. It
represents rate of growth for the organization and rate of work
for the individual. The underlying phenomenon, defined later in
the discussion section, is sense of urgency.) There have
been a number of typologies that cluster firms into categories
based on the degree to which they are growing or changing (e.g.
Miles & Snow, 1978 ). However, these types of categorization
schemes do not address the effect of rate of change on firm
performance. Therefore, in order to more fully understand how
rate of change (or pace) affects performance, this research
utilize a dual level research strategy, and in both cases, pace
is measured as a continuous variable. The first study
investigates how organizational rate of growth affects company
stock price, while the second study focuses on the effect of pace
on individual employee performance scores. The dual level
research strategy is used to demonstrate the generalizability of
the moderating effect of valuing employees and pace on
performance.

This paper contributes to what we know about fast growth in
several ways. First, the research further develops work in
population ecology by examining the concept of inertia and its
effect on firm performance. Second, this paper applies protection
motivation theory in order to understand how individual pace
affects employee performance. Although the paper utilizes two
different theories in order to develop hypotheses for two
different levels of analysis, the resulting hypotheses are
similar due to the fact that underlying process at the individual
and firm level are similar.

In prior research that I conducted with Alice Andrews
(Welbourne & Andrews, 1996), we found that initial public
offering (IPO) firms that valued their employees were more likely
to survive five years after the IPO. The theoretical work behind
this study was developed using population ecology. As noted in
our earlier paper:

At the core of population ecology is the concept of
inertia (Hannan & Freeman, 1984). Although inertia
conjures up images of stale, immobile organizations, the term
does not necessarily mean standing still. Newton's first law
of physics states that an object at rest tends to stay at
rest and an object in motion tends to stay in motion. This
overall tendency to stay at rest or in motion is called
inertia. Webster's dictionary defines inertia as property of
matter by which it remains at rest or in uniform motion in
that same straight line unless acted upon by some force...
Inertia keeps an organization moving during a change, even
though the direction has changed. We know that initial public
offering firms are not at rest because they are entering the
public market in order to grow; therefore, for IPO firms,
inertia is a desirable characteristic because it helps them
to continue moving forward.

Population ecology claims that companies exhibiting higher
levels of inertia are more likely to survive. Thus, we assumed
that the IPO firms in our sample were moving (vs. at rest), and
we then utilized population ecology to assess the characteristics
of firms that should be associated with increasing inertia and
survival. We suggested that inertia within growing organizations
results in structural cohesion. Structural cohesion is an
employee generated synergy that propels a company forward. Based
on the population ecology literature (Hannan & Freeman,
1977), we then suggested that a company could enhance structural
cohesion by using employment practices that reflect employee
value (or placing a high value on employees). Thus, population
ecology arguments led to our hypothesis that employee value
increases structural cohesion, which improves survival chances.
Our hypothesis was supported with the data.

We alluded to, but did not test, the fact that growth or
movement is an important part of the performance equation. Thus,
firms that are standing still may not necessarily obtain a
performance gain by valuing employees. In fact, according to
population ecology, valuing employees would tend to increase
inertia, thus further encouraging being at rest. Given that
today's environment is one in which all organizations need to
move at a rather rapid pace, employment practices geared toward
standing still should not, by themselves, improve firm
performance. Therefore, rate of movement, or pace, becomes an
important variable for understanding performance. This
study only investigates pace in a positive direction (growth vs.
downsizing), even though the negative form (reducing size) may
have similar effects.

In this research, I expand our application of inertia to IPO
firms. We assumed in our earlier paper (Welbourne & Andrews,
1996) that all the firms in our IPO sample were in motion. But,
needless to say, the rate of motion for organizations differs;
therefore, rate of change (or motion) should also have an effect
on firm performance. Structural cohesion should have a stronger
and more positive impact on firm performance as a company's rate
of movement, or pace, increases. This is due to the fact that
structural cohesion helps employees propel the company forward,
even when tasks becomes more complex due to increased pace. Thus,
both rate of change and valuing employees are important, and I
hypothesize that the two will interact in predicting firm
performance.

Hypothesis 1: Valuing employees will interact with rate of
change to predict firm performance. Valuing employees will be
more effective for firms that are experiencing a faster rate
of change.

The dynamics of valuing employees and rate of change at the
organization level assume an underlying process that involves
individual employees. Those individuals who work in fast growth
environments are assumed to be more likely to work towards the
goals of the company when they feel they are valued. Although
this is an assumption, population ecology does not focus on the
effects on individual workers, therefore, the next section
utilizes protection motivation theory to understand the
individual process.

Protection motivation theory has been used in both
communications and marketing research to understand how
advertisers can create communications t hat influence behavior
(Tanner, Hunt & Eppright, 1991). The theory focuses on the
necessary balance of energy and coping ability (Welbourne, 1995).
Energy is derived from a strong emotional need to change
behavior. Applied to the marketing research, this energy directed
toward change results from communications aimed at triggering a
strong emotional response. Protection motivation theory has
specific applications to the emotion of fear, and advertising
campaigns aimed at dental hygiene, safety, cigarette smoking, and
alcohol have all attempted to make appropriate use of fear in
their campaigns to change behavior. Lazarus and Folkmann (1984)
refer to fear inducing messages, such as those used in these
types of communications as hot information that people cannot
ignore. The goal of a fear inducing message is to raise the
awareness of an individual through triggering an emotional
response. When awareness is raised, it should be accompanied with
energy directed at changing behavior.

But, protection motivation theory is clear in stating that in
order to obtain a behavioral reaction the emotion associated with
the fear appeal must be combined with the ability to cope. For
example, an effective anti-smoking campaign should have a strong
fear appeal associated with smoking, but it should also be
combined with a message about how one can quit smoking (e.g. use
the nicotine patch). Therefore, high energy associated with the
emotional need to stop smoking (due to advertisement), combined
with a perception that one can quit smoking (coping via the
patch) should result in the desired behavior (they attempt to
quit smoking).

How can this theory be used to predict individual work-related
performance? Employees who are higher performers in fast-growth
firms should be those who personally have a high level of energy
around getting their work done and who feel that they can cope .
In fast growth firms, the fast pace of the organization parallels
an advertising campaign in that the fast growth encourages an
emotional response. In this case, the emotional response is a
high need for accomplishment, which results in energy around goal
attainment. Thus, the inertia concept of rate of change at the
organizational level becomes pace of work at the employee level.
Working at a fast pace is associated with being driven to
accomplish a task. However, this fast pace needs to be associated
with coping in order to obtain high performance. Although coping
can be operationalized in a number of ways, the organizational
level conceptual arguments from population ecology provides a
clue about coping strategy. I suggest that employees who feel
that they are valued by the management team are those who are
more likely to feel that they can cope with the a fast-paced
environment. Thus, paralleling the organizational level work,
employee value interacts with pace to predict individual
performance.

Hypothesis 2: Perceptions of being valued by management
will interact with pace of work to predict individual
performance. Being valued by management will be more
important for employees who work at a faster pace.

Two theories, population ecology and protection motivation
theory, are used to state that fast pace and creating an
environment where employees feel valued affect both individual
performance and firm performance. I argue that this process works
at the individual employee level and at the organizational level.
Thus, fast growth firms will be more successful if the management
team creates an atmosphere where employees feel like they are
valued. In that type of environment, employees will be energized,
and because they personally feel valued, that energy and sense of
value will combine and result in their contributing to the firm's
success through exceptional performance. The two hypotheses will
be tested with two different samples. The first is a sample of
firms that conducted their IPO in 1993, and the second is a
sample of workers who are employed by a fast growth firm that
conducted its IPO in 1996.